New Lending Laws to Avoid More New Jersey Foreclosures
When the foreclosure properties rate began to rise steadily a couple of years ago, all fingers pointed to relaxed lending guidelines. In fact, predatory lending practices performed by aggressive and unscrupulous lenders have always been considered as the culprit for the considerable increase in the number of New Jersey foreclosure listings. Just recently, local politicians have introduced a new law that will protect buyers.
The legislation will require the mortgage solicitors or loan officers to accomplish a form and pay a $100 fee before the loan can be issued. These officers are also required to undergo trainings and pass licensing exams. In addition, a complete criminal background check would ensure that they are not engaged in illegal activities. It is believed that many loan officers tried to earn big commissions during the most recent housing boom by flocking to the subprime market, where borrowers have poor credit scores. They offer very attractive mortgage loan terms, like adjustable interest rates, zero down payments and even interest-only payments, and ignore underwriting guidelines.
It is not surprising that these subprime borrowers will find themselves in homes with mortgages they could never pay off. Not only will they end up losing their homes to foreclosures, but they will also suffer from the embarrassment of having a foreclosure record on their already-tarnished credit history.
Today, realtors like MostlyForeclosures.com are warning buyers of such loan officers and encouraged to learn more about them before entering into any transactions. Although buyers have to wait longer before being approved for loans, it would basically be in their best interest. The strict regulations being imposed will help reduce the growing number of New Jersey distressed properties and in turn, minimize the damaging effects of rising foreclosure homes rate on home appreciation values.
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